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Democrats call for wider GST tax breaks and simpler compliance for charities [and] A new deal for charities & not-for-profits.

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Senator John Cherry Senator Andrew Bartlett Australian Democrats Australian Democrats

Charities Spokesperson Community Services Spokesperson

12th October 2001 MEDIA RELEASE 01/616

Democrats call for wider GST tax breaks and simpler compliance for charities The Democrats would increase the GST exemption level for charities from $100,000 to $500,000 and introduce a simplified compliance regime under its Charities and Not-for-Profit Policy launched today in Brisbane.

The policy proposes that larger charities should have the option of claiming a fixed percentage of GST tax credits as a low cost alternative to full accounting, taking government grants completely out of the GST net and broadening the definition of charities used in tax law.

Democrats’ Charities spokesperson, Senator John Cherry, and Community Services spokesperson, Senator Andrew Bartlett, releasing the policy at Othila’s Young Women’s Housing and Support Service Inc. in Brisbane, said there needed to be a national policy to accommodate the charitable sector’s concerns.

“More demands are being placed on the charitable sector with more administration compliance costs - there’s been no attempt at an overall national policy,” said Senator Cherry.

“The Democrats have been active in defending the interests of charities for a long time. This policy, a first for a major political party, demonstrates our commitment to a new deal for charities. Charities need to be able to get on with the business of supporting the community, not the government.

“We will reduce tax compliance costs by giving smaller community groups a series of options, including the right to opt out of the GST, a simplified GST compliance regime based on fixed rebates, a simplified FBT exemption, and the exemption of grants from GST treatment,” concluded Senator Cherry.

Senator Bartlett said, “The not-for-profit sector is a significant and vital part of the Australian economy and community, employing 7 percent of Australians in paid work, with over 2.6 million Australians supporting charities in a voluntary capacity.

“The sector has been growing in importance with the increasing tendency of Government to offload activities onto it. The Democrats believe that the size of the sector requires a new Government body to regulate and assist the sector - and not the tax office,” said Senator Bartlett.

“We propose a Charities Commission based on the UK model to manage the issues affecting the sector, together with training and assistance to those running charities.

“The Democrats also want to address the skyrocketing public insurance liability bills for not-for-profit organisations by investigating the merits of a capped, government-underwritten public liability scheme,” concluded Senator Bartlett.

The policy also calls for the confirmation of the independent right of grant recipients to speak out on public policy issues.

For further information: Pam Hose 0408 752 750

A new deal for charities & not-for-profits ELECTION ‘01



The not-for-profit sector is a significant and vital part of the Australian economy and community. There are over 40,000 entities that have been endorsed as in-come tax exempt charities with the Aus-tralian Taxation Office since 1 July 2001. According to 1996 figures, not-for-profits employed 7 per cent of Aus-tralians in paid work and relied on the voluntary work of over 2.6 million Aus-tralians.

The Democrats strongly support the work of charitable and not-for-profit or-ganisations working towards the com-mon good of the community. This sec-tor has been growing in importance with the increasing tendency of Government to offload activities onto it. We are con-cerned about the shift to a market model of competitive outsourcing by government of social service delivery, rather than basing it on social policy and service user responsibility and commitment.

In addition, the sector has been suffer-ing from the double threat of declining volunteer numbers and increased ad-ministration costs due to taxation and government requirements.

Over the last two years, the Democrats have been extremely active negotiat-ing new benefits for charities and not-for-profits. These have included the es-tablishment of the ATO Charities Con-sultative Committee, broader GST ex-emptions for charities, a $30,000 ex-emption from Fringe Benefits tax, and an Inquiry into the Legal Definition of Charities.

The Democrats are the first party to release a comprehensive plan to assist the charitable sector. We will:

z Amend the GST to give all

not-for-profit organisations with a turnover of less than

$500,000 the chance to opt out of the GST, and pay them an annual tax offset payment equivalent to the GST that they would have paid on inputs (worked out on a sector-wide average). Over half of not-for profit organisations would be exempt under this plan;

z Amend the GST to give not-for-profit organisations access to a new simplified statutory for-mula allowing them to pay GST based on a fixed percentage, similar to the retail schemes, thereby reducing record keep-ing;

z Remove the GST from

grants to not-for-profit organisa-tion for the provision of services that are of a charitable or pub-lic service nature, and remove the requirement for grant recipi-ents to be registered for GST;

z Investigate moving to longer

grant periods or rolling grants for not-for-profit organisations to assist organisations in plan-ning along with a simplified and standardised grant mecha-nisms;

z Amend the FBT to give not-for-profits the option of provid-ing a car and a mobile phone in salary packages as an alter-native to the record keeping re-quirements of the $30,000 ex-emption;

Establish a Charities Commission to better

manage government relations with


Printed and Authorised by Jack Evans. 10 Brisbane Avenue, Barton, ACT 2600.

z Move to include in law a

broader definition of charities picking up more community service organisations in line with the Report of the Review of the Charities Definition;

z Support the extension of

GST-free treatment for charities to cover amateur junior sport-ing activities;

z Support a further compre-hensive Ralph-style inquiry to investigate the equity of the general tax treatment of vari-ous categories of not-for-profit organisation;

z Establish a Charities Com-mission to better manage gov-ernment relations with chari-ties. This Commission would:

- Determine applications for recognition as a charity in ac-cordance with relevant stat-utes;

- Provide training and assist-ance to office-bearers of charities on how to meet their obligations;

- Improve accountability mechanisms to ensure that charities adopt best practice in their internal manage-ment.

z Review Work for the Dole

arrangements to ensure that they do not become a burden for charities by creating cum-bersome administrative, super-visory and training activities;

z Promoting volunteerism by

exempting the unemployed from activity testing if they pro-vide volunteer labour to their charity of choice, and by pay-ing a “volunteers allowance” to such individuals;

z Encourage young profes-sionals to provide volunteer services to charities by provid-ing for forgiveness of HECS debts for hours worked in a vol-unteer capacity;

z Encourage corporate philan-thropy by appropriate tax incen-tives, development of partner-ship and publicising the work of corporate philanthropists;

z Reducing the cost of public

liability insurance for not-for-profit organisations by investi-gating the merits of a capped, government underwritten pub-lic liability scheme;

z Maintain and enhance the

freedom of not-for-profit bod-ies to communicate via free

and open political dialogue on political matters without fund-ing penalties.

Left to Right SENATOR ANDREW BARTLETT Welfare & Community Spokesperson NATASHA STOTT DESPOJA Leader SENATOR JOHN CHERRY Charities Spokesperson